New IRDAI rules: Now, health insurers cannot reject claims citing non-disclosure of pre-existing conditions after five years: Niva Bupa underwriting head | Simply Save

The Insurance Regulatory and Development Authority of India’s (IRDAI) decision to withdraw its proposal to reduce surrender charges in endowment policies has received a lot of flak in the recent weeks.

Giving in to insurers’ demands to rollback its December proposal, the insurance regulator retained the existing surrender value and charges norms, effective April 1. Given that most – over 50 percent – policyholders surrender their policies in the fifth year, higher surrender charges mean that  most incur a loss as they take home less than half the premiums paid during that period.

However, health insurance policyholders have a reason to cheer. The IRDAI has tweaked the product rules in their favour. All new policies will come with these clauses, which will also be incorporated into existing policies at renewal.

For one, the mandated maximum waiting period for pre-existing conditions or illnesses has been shortened from four years to three years. That is, if you are suffering from, say, diabetes, your insurer will pay hospitalisation claims related to the condition after you have paid at least three premiums (down from four earlier).

Likewise, insurers will now not be able to reject claims citing non-disclosure of pre-existing illnesses, except in cases of proven fraud, after 60 months of continuous coverage. That is, if you have paid five annual premiums, your claim will not be rejected on the grounds of suppression of health status or misrepresentation, unless that insurer can prove fraud.

To discuss these key changes amongst several others, Moneycontrol’s Preeti Kulkarni spoke to Dr Bhabatosh Mishra, Director, Claims, Underwriting and Product, Niva Bupa Health Insurance. Here are the key takeaways from the discussion:

-    Reduction in waiting period (four years to three years) and moratorium period (96 months to 60 months) will benefit policyholders

-    While insurers offer shorter waiting periods even today, it is left to the policyholders to do her homework and zero in on such policies. Mandatory shorter waiting period of three years will make the process easier for policyholders.

-   Shorter moratorium period will mean claims will become incontestable – for instance, on the grounds of non-disclosure of pre-existing ailments and conditions.

-   Insurers have also been allowed to design products to suit the needs of different target groups such as students, women and senior citizens

-   Such specialised products will better serve the needs of different age-groups and profiles